Establishing a Value:

Most business owners and entrepreneurs that contact Cascade Business Brokers are very interested in the processes employed in arriving at a proposed sale price. Many seek to know if there are standard formulas or “rules of thumb” that are followed.  While it is true that many business brokers employ some common and time-tested approaches, it is also true that there is no single methodology that fits all types of businesses. As a practical matter, coming up with a proposed sale price usually involves:

(1) the application of two or three different methodologies - establishing a range of possible values,

(2) the results of industry research,

(3) the current condition of the local and national economy,

(4) the input of other special advisors or colleagues of the ownership,

(5) the input of the owners and their chosen business brokers.

Additionally, there may be various discounts or premiums that should be applied to any proposed value. Examples could include a dramatic downturn in the economy, technological changes that will be affecting the industry, labor shortages, increases in competition, major management changes, and major regulatory changes.

Thus, overall there are many factors to consider in arriving at an Opinion of Value. Each business -- with its competitive environment, type and level of assets, and its location -- is unique. Cascade Business Brokers works closely with each owner to demystify and simplify the process. We take the time to explain each successive step, theory, or circumstance that may be entailed for any given business. For each owner, we discuss and document our approach in detail.

The end goal of our Opinion of Value is to establish a sale price that is realistic for the given industry and in the current economy. To have a successful sale, businesses must be priced accurately and reasonably for the current marketplace, and any sale transaction must be structured in such a way that the deal will last over the long haul.  

To do otherwise dramatically increases the probability that the business will remain on the market for an extended period of time. An accurate and reasonable price will serve to fairly compensate the seller for his or her investment and many years of hard work, and at the same time justify retention of the company on any “short list” of prospective buyers who are looking at various companies to buy in the current marketplace. As a practical matter, the agreed-upon asking price must support the business needs of both sides of any sale transaction. Cascade Business Brokers specializes in marrying these two sets of needs together to form a successful sale transaction.

Special Note – Cascade Business Brokers is primarily a business marketing firm, and we do not hold ourselves out as “certified appraisers.” Therefore, we do not undertake an Opinion of Value where the prospective client seeks an opinion related to partnership dissolution, marriage dissolution, stock value determinations, and the preparation of valuation information for litigation purposes. Many of our colleagues within the accounting and business consulting professions specialize in these areas, and some have special certifications related to them (e.g., Certified Valuation Analyst – CVA – for accountants).  We will gladly provide names upon request.